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KUALA LUMPUR: Fitch downgraded Malaysia’s sovereign credit rating to BBB + from A- with a stable outlook, noting that the government’s rapid response to the Covid-19 pandemic and material relief measures have added to the tax burden of the country.
Credit rating agencies have taken more than 220 negative rating actions since the beginning of March, with more than 100 sovereign downgrades.
“Measures to contain the internal spread of the coronavirus, combined with weak investment and low tourism income due to the pandemic, have reduced economic activity, as it has in many countries around the world,” the rating agency said.
Fitch recognizes Malaysia’s swift response to the crisis, with material relief measures for affected individuals and businesses.
“However, the impact on the Malaysian economy has been substantial and has added to Malaysia’s tax burden, which was already high relative to its peers who entered the health crisis,” he said.
Fitch expects GDP to contract 6.1% in 2020, before rebounding 6.7% in 2021 due to base effects, a reactivation of infrastructure projects and a continued recovery in exports of manufactured goods and materials. cousins.
“We forecast growth of 4.6% in 2022, with the expectation that Malaysia’s diversified economy will generate strong growth in the medium term,” he said.
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